Maker is a lending platform that enables users to acquire over-collateralized loans by locking Ether in a smart contract and generating a stablecoin called $2, which is pegged to the US dollar. The stability of Dai is achieved through a dynamic system of collateralized debt positions, autonomous feedback mechanisms, and incentives for external participants. Once created, Dai can be freely transferred, used for transactions, or held as long-term savings.

The Maker protocol, established in 2014, aims to establish a permissionless credit system that allows users to secure loans backed by cryptocurrency. These loans are created through smart contracts that generate a stablecoin called $2, with a soft peg to the US dollar. The Maker Foundation, in collaboration with external parties, developed the protocol and gradually transferred control to a decentralized autonomous organization (DAO) called MakerDAO. The DAO comprises individuals from all around the world who own the MKR token, granting them voting rights for important decisions.

MakerDAO initially launched Single Collateral Dai (SCD) in December 2017, which used Ethereum as the sole collateral for loans. Despite a significant decrease in collateral value, SCD supported $100 million in debt while maintaining a close peg to $1. It became a crucial part of the decentralized finance ecosystem as the only widely adopted stablecoin not backed by a company holding US dollars. However, the aim was to transition to Multi Collateral Dai (MCD) to accept various types of collateral and implement important design changes.

In November 2019, MakerDAO upgraded the protocol to MCD, allowing Basic Attention Token ($2) as the first additional collateral option. While the existing single collateral system continues to operate, users are encouraged to migrate to the new Dai. Eventually, the single collateral system will be phased out. MCD introduced the Dai Savings Rate (DSR), which enables Dai holders to earn yield, and collateral auctions to establish a competitive liquidation market.

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